If Arthur Godfried Invests $1,000 Today at a Rate of 7

question 78

Multiple Choice

If Arthur Godfried invests $1,000 today at a rate of 7% compounding yearly, what will the value of the investment be in 4 years?
$\begin{array}{|c|c|c|c|c|c|c|}\hline\text { Future } \\\text { Value of } \\\$ 1\\\hline&4\%&5\%&6\%&7\%&8\%&9\%\\\hline 1& 1.040 & 1.050 & 1.060 & 1.070 & 1.080 & 1.090 \\\hline 2& 1.082 & 1.103 & 1.124 & 1.145 & 1.166 & 1 .188 \\\hline 3 & 1.125 & 1.158 & 1.191 & 1.225 & 1.260 &1.295 \\\hline 4 & 1.170 & 1.216 & 1.261 & 1.311 & 1.360 &1.412 \\\hline 5 & 1.217 & 1.276 & 1.338 & 1.403 & 1.469 & 1.539\\\hline 6 & 1.265 & 1.340 & 1.410 & 1.501 & 1.587 &1.677 \\\hline 7 & 1.316 & 1.407 & 1.504 & 1.606 & 1.714 &1.828 \\\hline 8 & 1.369 & 1.477 & 1.594 & 1.718 & 1.851 &1.993 \\\hline 9 & 1.423 & 1.551 & 1.689 & 1.838 & 1.999 & 2.172 \\\hline 10& 1.480 & 1.629 & 1.791 &1.967 & 2.159 &2.367 \\\hline\end{array}$

• A) $1,311
• B) $1,967
• C) $1,316
• D) $1,000

Distinguish between moral hazard and adverse selection and their respective remedies.

Grasp how personal investment influences loan credibility and project viability.

Realize the importance of monitoring and incentives in mitigating employee moral hazard.

Comprehend the financial implications of riskier investments and the role of interest rates.

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Definitions:

Self-monitoring

Refers to an individual's awareness and control over their expressions and interactions in various social contexts to align with expected norms.

Autonomy

The extent to which an individual or job provides freedom, independence, and discretion in scheduling the work and determining the procedures to be used in carrying it out.

Self-directed Work Teams

Groups of employees who are given autonomy to plan and carry out their tasks with minimal direct supervision.

Reward System

Mechanisms within an organization designed to recognize and reinforce employee behavior, contributing to the achievement of company goals.